Thu January 2, 2014

A Bet, Five Metals And The Future Of The Planet

This famous bet — between a biologist and an economist — was over population growth. It started three decades ago, but it helped set the tone for environmental debates that are still happening today.

The biologist at the heart of this bet was Paul Ehrlich at Stanford. He wrote a best-selling book in 1968 called The Population Bomb. It was so popular he appeared on The Tonight Show with Johnny Carson.

He told Carson, "There are 3.6 billion people in the world today, and we are adding about 70 million a year. And that's too many. The very delicate life support systems of the planet, the things that supply us with all of our food, with ultimately with all of our oxygen, all of our waste disposal are now severely threatened."

Despite Ehrlich's sobering message, Carson had him on 20 times.

The guy on the other side of the bet, the economist Julian Simon, didn't buy Ehrlich's argument. Simon didn't see the growing population as a catastrophic problem. He explained that we are not like any other species. We have an economy and markets. So, according to Simon, if the world demands more oil, the price of oil will go up, and there will be an incentive to find more, or find an alternative.

Both Ehrlich and Simon enjoyed being provocative. Ehrlich started a movement called "Zero Population Growth." He got a vasectomy to set an example. And he proposed a tax on diapers to keep population in check.

Simon took to wearing devil horns on his head when giving talks.

Paul Sabin, a historian at Yale, told the story of this famous bet in his new book The Bet. And Sabin says Simon's side never really got as much notice as Ehrlich's — and that, it seems, is why he proposed the bet.

Simon proposed that they bet on what would happen to the price of five metals — copper, chromium, nickel, tin and tungsten — over a decade.

And the logic was that these metals were essential for all kinds of stuff — electronics, cars, buildings. So, if Ehrlich was right, more people on the planet would mean we would start running out of stuff, and the price of these things should go up.

But, if Simon was right, the markets and human ingenuity would sort things out, and the prices would stay the same or even go down.

And before we get to how the bet turned out, it's worth remembering the context for all this.

The 1970s felt like a time of shortages. TV news showed famines in Africa. And here at home in 1974, there were long lines at gas stations because of conflict in the Middle East.

President Richard Nixon went on television. He asked people to drive more slowly to conserve fuel. And to kill outdoor Christmas lights.

Those next 10 years, from 1980 to 1990, crept by. The world population grew by 800 million people. Then it was 1990. And they tallied it up. Simon, the economist, decisively won. Prices for the five metals went down by an average of 50 percent.

One of the reasons the prices dropped was just what Simon said. The catastrophe Ehrlich was predicting just did not happen. People invented substitutes, like companies switching from aluminum to plastic for packaging.

But Paul Sabin at Yale says, personally, he worries a lot about the environment. And he wonders if the bet actually poisoned the waters, helping to set the stage for a world where environmental debates are framed by the extremes — one side warning of certain catastrophe, and the other saying everything is going to be great.

In October 1990, the economist Julian Simon was going through the mail at his house. And he found a small envelope from California. Inside was a check from Paul Ehrlich for $576.07. There was no note.

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Transcript

RENEE MONTAGNE, HOST:

There are over seven billion of us on the Earth today, double the global population back in 1968, the year our next story begins. It's a story about a famous bet over population growth, a bet that some say helped set the tone for many environmental debates today.

Here's Planet Money's David Kestenbaum.

DAVID KESTENBAUM, BYLINE: The bet was between a biologist and an economist. The biologist, Paul Ehrlich at Stanford, was an expert on butterflies. He'd written a book called "How to Know the Butterflies," which was not a big hit. But then in 1968 he wrote another book. This one took him just a few weeks to put together. The book was called "The Population Bomb" and it got him on TV.

(SOUNDBITE OF TV SHOW, "THE LATE SHOW")

ED MCMAHON: Heeeeere's Johnny.

KESTENBAUM: The fact that Ehrlich appeared on "The Tonight Show," it's kind of amazing because when he sat down with Johnny Carson for the interview, his message was a bit of a downer.

PAUL EHRLICH: There are 3.6 billion people in the world today and we're adding about 70 million a year, and that's too many. The very delicate life support systems of the planet - the things that supply us with all of our food, ultimately with all of our oxygen - are now severely threatened.

KESTENBAUM: Ehrlich was on the show over 20 times. And "The Population Bomb" became a bestseller. Ehrlich's warnings had a kind of obvious logic to them. When animal populations grew and depleted their resources, their food supplies, those populations often crashed.

Paul Sabin is a historian at Yale who just wrote a book on all this called "The Bet."

PAUL SABIN: There were a number of biologists and they were sort of extrapolating from their studies, in his case the butterflies - the idea of cycles of population growth and then population collapse. And there would be a devastating, extraordinary apocalyptic crash unless we took action now to try to avert that.

KESTENBAUM: So Paul Ehrlich is going to be on one side of this bet. The guy on the other side at this point is basically at home watching Ehrlich on television and getting really worked up about it. He's an economist named Julian Simon. Simon had also been worried about population. But the more he studied it, the less worried he got. Here is Simon on the TV show "Firing Line," with William F. Buckley, trying to explain why he thinks we will not run out of resources.

(SOUNDBITE OF TV SHOW, "FIRING LINE")

JULIAN SIMON: Whether it be copper or wheat or oil, we tend to think of the supply as being finite - we think about running out. But if we think instead about our capacities to increase that supplies - by finding substitutes or by finding better ways to get more of it, or by replacing it - then we begin no longer to think about supply of oil or copper as being finite.

WILLIAM F. BUCKLEY: So if you don't have copper for telephone lines but you do have satellites to transmit messages, you are as well off as though you have infinite supply of copper.

SIMON: Exactly.

KESTENBAUM: Simon was basically arguing: We are not like butterflies. We are not like any other species because we have an economy with markets. If the world demands more oil, the price of oil will go up and there will be an incentive to find more, or find an alternative.

Both Ehrlich and Simon enjoyed being provocative. Ehrlich started a movement called Zero Population Growth. He got a vasectomy to set an example and at one point proposed a tax on diapers to keep population in check. Julian Simon meanwhile seemed to enjoy poking the population worriers in the eye. He later took to wearing devil horns on his bald head when giving talks.

But Simon never got the attention that Ehrlich the megastar biologist did. And that, it seems, is why he proposed The Bet.

Again, author Paul Sabin.

SABIN: Simon wrote an article in the journal Science that denounced Ehrlich and all people like him. And this was the first time, I guess, that Ehrlich really sort of...

KESTENBAUM: Recognized...

SABIN: ...noticed him, I think. And there was a furious reply and then Simon proposed an actual bet, saying, you know, put your money where your mouth is, let's test these ideas.

KESTENBAUM: And here is how they decided to bet on the future of humanity. They bet on the price of five metals: copper, chromium, nickel, tin and tungsten. The logic was that these metals were essential for all kinds of stuff, for electronics and cars and buildings. So if Paul Ehrlich was right that more people on the planet would mean we would start running out of stuff, then the price of these things should go up. But if Julian Simon was right - that the markets and human ingenuity would sort things out - then the prices, they would stay the same or even go down.

Before we get to how the bet actually turned out, it's worth remembering the context for all this. The 1970s felt like a time of shortages. TV news showed famines in Africa. And here at home in 1974 there were long lines at gas stations because of conflict in the Middle East.

This is from NPR that year.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN #1: How long you been waiting in line?

UNIDENTIFIED MAN #2: About five minutes. I just cut in front of a whole bunch of people.

UNIDENTIFIED WOMAN #1: Did that guy behind you tell you that he cut into the line? Twice I got out to talked to him.

Well, there's really not too much I can do about it at this stage of the game. I mean you need gas. I mean this monster has to have gas to run.

KESTENBAUM: President Richard Nixon went on television. He asked people to drive more slowly to conserve fuel and to turn off outdoor decorative lighting.

PRESIDENT RICHARD NIXON: We are already planning right here at the White House to curtail such lighting that we would normally have at Christmas time.

KESTENBAUM: That's right. Nixon tried to kill Christmas lights. A cover story in Newsweek at the time summed things up. The title: "Running Out of Everything."

So that was the context for The Bet. The time period for the wager was a full decade, from 1980 to 1990. Would the price of the five metals go up or down? Those next 10 years crept by, during which the world population grew by 800 million people. Then it was 1990.

Who won The Bet?

SABIN: So Simon decisively won the bet. The prices went down by on average around 50 percent.

KESTENBAUM: Did they all go down?

SABIN: They all went down.

(LAUGHTER)

KESTENBAUM: Poor Ehrlich.

SABIN: Poor Ehrlich, right. It was a pretty substantial loss in terms of the outcome of that bet.

KESTENBAUM: One of the reasons the prices dropped was just what Simon said: People invented substitutes. Instead of aluminum, companies used plastic.

Paul Sabin at Yale says personally he worries a lot about the environment. But you got to give this one to Simon. The catastrophe Ehrlich was predicting just did not happen. So far we have not been just like butterflies. We're more complicated.

SABIN: I think that clearly victory has to go, at least so far, has to go to Simon.

KESTENBAUM: What is the good that came out of this bet?

SABIN: Well, I think that - see, I'd be much more cautious about what saying what good thing we learned out of this bet. There was a lot of fighting. There is not a lot of listening. And the other problem here is that a bet about metal prices is really poor proxy for thinking about the state of the planet.

KESTENBAUM: Sabin says he think this bet actually poisoned the waters. It helped set the stage for a world where environmental debates are framed by the extremes, one side warning of certain catastrophe, the other saying everything is going to be great.

In October 1990, the economist Julian Simon was going through the mail at his house and he found a small envelope from California. Inside was a check from Paul Ehrlich for $576. 07. There was no note.